Serial CEO Incentives and the Structure of Managerial Contracts

Posted: 28 Feb 2011

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Multiple version iconThere are 3 versions of this paper

Date Written: February 25, 2011


I explore CEOs' incentives to select firm strategies and to acquire firm-specific skills when CEOs have job-hopping opportunities. Several features of managerial compensation, such as benchmarking of pay to larger and more prestigious companies, payments unrelated to past performance, unrestricted stock awards for highly paid CEOs, long-term incentives, and higher pay in companies granting long-term incentives, emerge in the optimal contract. I argue that the model can explain the change in the structure and the surge in U.S. CEO compensation as well as differences across countries and across firms within a country.

Suggested Citation

Giannetti, Mariassunta, Serial CEO Incentives and the Structure of Managerial Contracts (February 25, 2011). Journal of Financial Intermediation, Forthcoming, Available at SSRN:

Mariassunta Giannetti (Contact Author)

Stockholm School of Economics ( email )

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SE-113 83 Stockholm
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Centre for Economic Policy Research (CEPR)

United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
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Swedish House of Finance ( email )

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111 60 Stockholm

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